The case is Realtime Adaptive Streaming L.L.C. v. Sling TV, L.L.C., precedential opinion by Judge Alan Albright sitting by designation, joined by Chief Judge Moore and Judge Lourie. The plaintiff originally filed suit for the infringement of three patents (‘897, ‘610, and ‘535) relating to digital data compression. The plaintiff withdrew its claims relating to ‘535, after the PTAB found claims 1-14 of ‘535 unpatentable on obviousness grounds. The opinion doesn’t say what happened to ‘897, but apparently the case proceeded on ‘610 alone (an IPR concerning that patent having been terminated as untimely by the PTAB, and that judgment having been affirmed on appeal). The district court thereafter granted summary judgment in favor of the defendants (collectively referred to in the opinion as DISH, which is the parent of Sling) on ‘610, on subject matter grounds, and the Federal Circuit affirmed that decision per curiam in 2023. The district court then granted the defendants’ motion for attorneys’ fees, finding this to be an exceptional case in view of six “red flags.” The Court of Appeals now vacates the fee decision as an abuse of discretion.
The six flags (no relation to the amusement parks) consisted of (1) and (2), decisions by other district courts in cases brought against Google and Netflix, finding claim 15 of the ‘535—said to be “virtually identical,” “essentially the same in substance,” to claim 1 of ‘610—patent-ineligible; (3) the Federal Circuit’s unpublished decision in Adaptive Streaming Inc. v. Netflix, Inc., 836 Fed. Appx. 900 (Fed. Cir. 2000), affirming “the ineligibility of claims directed to receiving a video signal in one format and broadcasting the signal to other devices in a different, more suitable format” (p.9); (4) the PTAB’s invalidation of claims 1-14 of ‘535 on novelty and obviousness grounds; (5) two nonfinal Office Actions, made during an ex parte reexamination proceeding, rejecting claim 1 of ‘610 on obviousness grounds (later affirmed by the PTAB, but only after the fee decision at issue here); and (6) a letter sent by DISH to Realtime in February 2021, advising the latter that ‘610 was likely unpatentable in view of (1), (2), and (3) above. On appeal, the court agrees that (1) and (2) were part of the relevant totality of circumstances for the district court to consider in making its exceptionality determination, but not (3) through (6). In particular, the Adaptive Streaming decision “was about a different technology altogether” (p.10); the invalidation of ‘535 and the Office Action relating to ‘610 related to novelty and/or obviousness, which did not eliminate the possibility that ‘610 was patentable subject matter; and the notice letter didn’t add anything additional to the mix. As for the novelty and nonobviousness issues relating to ‘535 and ‘610 in particular, while there is some overlap in the considerations relevant to these issues and to the second Alice step (whether the claims transform otherwise ineligible subject matter into an inventive concept, or merely recites “well-understood, routine, and conventional” activities or elements), the Federal Circuit indicates that the district court inferred too much. “At best, the [PTAB decisions related to ‘535] establish that the throughput limitation was known to the prior art,” but that “does not mean it was well-understood, routine, and conventional,” and thus the PTAB decisions did not “put Realtime on notice that its arguments regarding the eligibility of its claims were entirely without merit” (p.11); and to the extent the district court relief on the Office Actions relating to ‘610 as red flags, “it analysis is lacking for many of the same reasons,” even though it involved the same patent as the patent in suit, and in view of “the fact that the examiner and the Board used the broadest reasonable interpretation standard of claim construction” to construe the “throughput” limitation more broadly than did the district court (p.12).
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